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Is the Globalization of Services Beneficial for Developing Countries?

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“Topics in Economic Globalization” Is the globalization of services beneficial for developing countries? Basma [email protected] University of Gottingen Faculty of Economic Sciences Abstract: International Trade in Services is regarded as the new phase of globalization, which has been growing for more than a decade. Developing Countries particularly in Asia have become the largest producers of services for industrial countries. They also specialized in many professional services such as back office services, customer care, call-centers and also research services.

Developing countries didn? t only take part in these services, but they also proved to be successful in offering them through the comparative advantages they have.

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So, the old idea that developing countries won? t be able to compete with developed countries in liberalized service trade proved to be a mistake. Developing countries are now competitive, they are playing an important role in the world service trade and they bring very high growth rates to foreign investors. @ abdelaziz. [email protected] com Primo Braga, C.

A. March 1996 ; “The Impact of the Internationalization of Services on Developing Countries”. Table of Contents: I. Introduction: II. Defining Services Definition Classification of Services Trade in Services The GATS Classification of Services III. Important Factors in Service Trade IV. Barriers in Service Trade Non-Tariff Barriers in Service Trade V. Impacts of globalization of services on developing countries Impact on performance Impact on growth Impact on foreign trade Impact on FDI VI. Concluding Remarks Appendix

Figure 1 : Openness in developing countries: Figure 2: WTO Members share in world commercial services trade Chart 1: Synthetic view of modes of supply Figure 3: Trade restrictiveness index in the professional service sector Figure 4: Trade restrictiveness index in the banking service sector Table 2: FDI outflows from some major developing countries Figure 5: Growth of Indian software revenues, 1984- 2000 Figure 6: Trade restrictiveness Index in the telecommunications service sector Table 3: Sectoral Growth Rates in India Table 4: Foreign Trade in USD Table 1: Types of entrants and their share in revenues and employment (1990-2000)

References I. Introduction: Whether liberalization of services is beneficial for developing countries or not is a question which answer can only be found through case studies on a certain country and not just theoretically. Developing countries differ in the way they react on the globalization process and the internationalization of products and services. There are a number of factors that make a certain developing country interested in dealing with other countries and a number of barriers that may not allow it to go into business. Generally speaking, any developing country should try it? best to gain a place in the international trade of services in order to improve its GDP, cut the unemployment rate and improve the performance of its employees. But experience proved that there should be some historical facts in this country which make a solid ground for the set up of the business and the absorption of new foreign ideas; e. g. India. Developing countries in Africa and the Middle-East didn’t take much part in the liberalization process of services, whereas countries such as China and India are considered to be key players in the service industry (Figure 1: Openness in developing countries).

On the other hand there are countries such as the Islamic Republic of Iran, Libya, Algeria and Russia which are in need of the trade in services, but they remain observers of the WTO and don? t participate in any of the WTO agreements. (See figure: WTO Members share in world commercial services trade) India is considered as the world leader in services as it worked on both the manufacturing and the non-manufacturing services; on the other hand China focused more on the manufactured services.

I’ll come to mention India in many parts of my paper, as it’s in my point of view the best example about developing countries which are successfully participating in the trade of services. But still the answer of the topics’ question is not “yes” for India, as the liberalization of services also brought some disadvantages to the country such as inequality problems and the dependency of the Indian economy on other world economies. These disadvantages are still not considered as big problems for the Indian government as long as its GDP is still growing and the unemployment rate is falling down.

Many factors influenced the participation of India in the globalization process, such as the English language, transportation, low capital and labor costs and governmental facilities. I’ll talk more about these Factors in Section III in my paper. Section IV explains the barriers that face the liberalization of services in developing countries. Also important to mention is the role of the World Trade Organization (WTO) in setting agreements such as the General Agreement of Trade in Services (GATS), in order to facilitate the trade process.

At last (in section V), I’ll examine the impacts of service trade liberalization on developing countries and mention how it influences a countries GDP and style of living. II. Defining Services Definition In order to understand what a service is, we should firstly understand why services are different than goods. To buy a good means to buy an object, which is tangible, visible, transportable and storable. It`s just like buying a Personal Computer. A consumer who is buying a service is expecting a certain kind of performance or quality.

The service is an intangible, invisible, perishable, inseparable and a heterogeneous subject (Zeithaml et al. 1985). It? s like asking for a DSL and contacting with the customer service of a certain company, in order to test the quality of the modem, connectivity and speed of the internet. It? s also like booking a flight in a well-known travel company such as Lufthansa, as one expects a very good customer service, an on time arrival and a safe flight. Inseparability means that the production and consumption of services happen at the same time.

Nowadays, we can’t say exactly that a service is inseparable as software programming is a service that can actually be stored, but it’s still regarded as a service and not as a product. Another difference between goods and services is the participation of the customer in the production of the service. Although services are heterogeneous and are nowadays also provided by mass production, but still services are primarily more people intensive than equipment-intensive. Very good examples of this kind of services are professional business services such as accounting and engineering. 2002.

Manual on Statistics of international trade in services. Non-transportability as well as the requirement of direct interaction between consumer and producer in certain cases are characteristics of services. The need for factor mobility to provide certain services changed the fact that services are not transportable. Transport itself is a service which means that it should be easy for a service to be provided at a distant location through shipping, movement of service provider or through the use of modern communication technologies ‘over- the-wire- service’ (Bhagwati 1984). Classification of Services PW.

Daniles defined a service on the basis of the utility that it provides, he differentiated between short-, medium- and long-term utilities: A short-term utility is a service that is provided immediately, such as fast-food restaurants, cinema and petrol stations. A medium-term utility provides a semi durable service like automobile repair, dental treatment and other medical services. A long-term utility provides durable services such as life insurance and mortgage financing. Services can also be classified according to Singelmann classification of service (1978), who divided services into four groups: Personal services (e. . hotels, laundry, entertainment), which provide services to natural persons 4. Producer services (e. g. insurance, banking, engineering, legal services) that provide a special kind of services. Social services (e. g. education, health, government) and distributive services (e. g. retail, transportation) 5 The Classification that I prefer to use in this paper is the one of the OECD, which doesn`t contradict with any of the above mentioned classifications, but it only categorized the different kinds of services under some groups. 1.

Business Services (advertising, market research, management consulting, placement services, technical support services, translation services, research and development services and real estate services) Aharoni, Y. ; 1993; “Coalitions and competition: the globalization of professional business services”. A Natural person in GATS is an individual. A foreign natural person in a country means an individual who does not reside in the country and who is a national of or has the right of permanent residence in a foreign country. Daniels, P. W. ; 1993”; “Service Industries in the World Economy”. 2.

Professional Business Services PBSs (legal services, accounting, auditing and bookkeeping, taxation, architectural, engineering and related services, medical, dental, nursery and paramedical services, veterinary services) 3. Computer and related services (hardware, software implementation services, data processing services, database services, maintenance and repair services of office machinery and equipment) 4. Internet-Related Services 5. Telecommunication Services 6. Tourism and Travel Related Services (travel agencies, tour operators` services, tourist guides services and hotel and restaurant services) 7.

Port and Related Services, and shipping services 8. Financial Services (insurance, insurance-related services, banking and other financial services) 9. Health Services (medical, dental, nursery and paramedical services, hospital, social and other human health services) 10. Construction Services 11. Higher Education and Training Services 12. Audiovisual and cultural services (motion pictures, video tape production, distribution services, motion picture projection services, radio and television services, radio and television transmission services, sound recording, and other. ) 13.

Distribution Services This categorization allows the OECD to test to what extent a certain service does apply some of the GATS Modes of supply and what barriers on trade these services do face. Trade in Services Just as the industrial revolution caused division of labor and specialization in the production of industrial goods, the information revolution brought increased specialization of service sector inputs and outputs, particularly in technologically advanced economies, services that were previously produced within the firm are now acquired form specialists outside it (Porter 1990).

Bhagwati (1984:19) refers to this phenomenon as the “out-house” versus “in-house” Nielson, J. ; D. Taglioni; 2004; “Services Trade Liberalisation: Identifying Opportunities and Gains”. use of service inputs. A corporation can hire security personnel from another security service provider rather than internalizing the production of this service. 7 So, many countries decided to operate with developing countries and give certain work tasks to countries that proved to be more efficient in performing them and see whether this a good way to cut costs or not.

This proved to be a strategic necessity by time, as countries such as China and India offered many more opportunities beside the saving opportunity. The GATS Classification of Services Trade in Services consists of transactions which take place without the movement of factors of production to the receiver, and other which require the movement of the receiver himself to the factors of production. That’s why, the General Agreement on Trade in Services, decided to adapt four modes of international service transactions as a basis for service trade liberalization.

These modes allow the non-tariff trade of services among the member countries of the WTO. The first mode is the cross border supply of services from one country to another. A service should cross the frontier of a country in order to be categorized under this mode. It should be a movement of neither the consumer nor the supplier. Both, the supplier and the consumer interact through the different means of telecommunications such as post, fax mail or electronic mail. Mode 2 is called: Consumption abroad.

It requires the movement of the mobile service consumers to the supplier`s country. A good example for this mode are students who travel to study certain courses which are only offered in certain countries and tourists who travel seeking good weather or visiting historical places. Commercial presence (mode 3), is when a service supplier establishes a foreign based corporation, joint venture, partnership, or any other kind of business in the consumer`s country of residence, in order to supply services to persons in the host country.

Presence of natural persons (mode 4), involves an individual who has a private business or is working for a service provider and should temporarily travel abroad to deliver a service in the consumer’s country of residence. This mode doesn’t include persons who migrate in search for work or citizenship. (Chart 1: Synthetic view of modes of supply) Aharoni, Y. ; 1993; “Coalitions and competition: the globalization of professional business services”. Hufbauer, G. ; Warren, T. ; 1999; “The Globalization of Services: What has happened?

What are the implications? ” III. Important Factors in Service Trade Many factors influenced the participation of India in the globalization process, such as the english language, transportation, low capital and labor costs and governmental facilities. 9 1. The Migration of jobs from developed countries to developing countries lead to lowering the costs of service production. 2. Developing countries proved to have a competitive advantage in producing services, as the opportunity cost of production was much less than in developed countries.

They intended to follow a high-performance strategy and so, they were able to meet up the expected service quality. 3. A country that offered a favorable environment to the relocation of service production, could easily increase its’ trade in services with developed countries. A good example is India where its’ higher educational institutions, infrastructure, large labor force, and government policies have changed in a way that motivated and supported the production of IT services for the international service market. 0 4. The low-cost employees and the competitive advantage encouraged companies of industrial countries to move their work to developing countries through off shoring, in order to increase their revenues. Whereas the offshore of a certain business function involves many examinations of the labor force availability, government policies, factor costs, risk factors and comfort level with the location. 11(See table: Types of entrants and their share in revenues and employment (1990-2000)) 5.

A relatively cheap labor force is a factor which is very easy to find in a developing country, but what is more important is that these workers should be highly talented and highly motivated, who can provide a high quality service by the use of innovative resources of developed countries in a developing country. 6. The english language allowed developing countries such as India to serve the Englishspeaking market, Eastern Europe and Russia to serve Western Europe and China to serve Japan.

This specialization of certain developing countries to fill market gaps in more developed countries caused a global division of labor which is also advantageous for developing countries on the first hand. Dossani, R. ; Apr. 2005; “Globalization and the Offshoring of Services: The case of India”. Marklund, G. ; Shah, B. ; Umezawa, T. ; “Chapter 3: The Country Perspective”. Dossani, R. and Kenney, M. ; 2007; „The Next Wave of Globalization: Relocating Service Provision to India”. 7. Tax exemptions and cutting tariff-barriers through the GATS and other government agreements between the different developing countries and eveloped countries, had a significant effect on the structure of the Indian industry which decreased the demand on Indian goods and so, India was able to have a higher share on exports. But on the other hand, the domestic market was less attractive to its’ local consumers and the amount of imports also increased. 8. Government regulations that don’t prevent investments in foreign exchange, helped in increasing the amount of exports and the establishment of foreign offices in developing countries.

Before 1990, Indian efforts of investing in foreign exchange were prevented by government restrictions, which were solved later. Legislations after 1990 allowed firms to invest on foreign exchange and consequently allowed multinational firms to establish wholly-owned enterprises in developing countries. Whereas it’s beneficial for developing countries to have multinational firms in their country, as it can participate more in advanced research and development and so more workers can be trained on more difficult working tasks.

Other governmental regulations that protect local entrepreneurship and new industries would also allow a developing country to reach high growth rates and help low skills to develop rapidly in order to remain competitive in the global market. 9. The availability of statistical methods and information that help an industrial country to take the decision of operating in a developing country. These information are now available through the World Trade Organization, which is playing a major role in easing the trade process through the different countries.

The main source of information for services trade data is given by balance of payments (BOP) statistics which are assembled according to the fifths edition of the International Monetary Funds Balance of Payments Manual (BPM 5). These statistics refer to services traded internationally mainly through cross-border supply of services (Mode 1) and consumption abroad (Mode 2), through commercial presence (Mode 3) and to trade through the movement of natural persons (Mode 4). They also give information on the value of services traded through these supply modes. See Chart: Synthetic view of modes of supply) Also, the Foreign Affiliates Trade in Services (FATS) statistics is an important source of information. They give data concerning the activity of majority-owned foreign companies of a -9- certain nation which situate in a foreign country (outward FATS) and data on their activities in their home country (inward FATS). It collects information on different variables such as: sales, output, number of employees, value-added and number of enterprises and so, these statistics can perfectly give information on mode 3: Commercial Presence of a corporation.

In addition, information on services trade via movement of natural persons can be collected from FATS statistics, where it’s possible to know how many foreign workers are employed in a foreign corporation. It’s also possible to know other labor-related statistics such as compensation of employees, migration remittance and temporary movement of people through the data available at the International Labor Organization (ILO) and the International Standard Classification of Occupations (ISCO 88) which concentrates on the delivery of services.

There is a number of other statistics that play an important role in identifying and measuring the value and the volume of services traded, such as the International Telecommunication Union (ITU), World Telecommunication Indicators, the World Tourism Organization statistics and the International Air Transport Association (IATA). 12 12 Dihel, N. , Eschenbach, F. ; Shepherd, B. ; 2006; “South-South Services Trade”. – 10 – Box 1.

Statistical coverage of modes of supply Mode Mode 1: Cross border supply Statistical coverage BPM 5: Transportation, communication services, insurance services, financial services, royalties and license fees. Part of: Computer and information services, other business services, and personal, cultural, and recreational services. Sectoral Statistics: telecommunications; air transport. Mode 2: Consumption abroad BPM 5: Travel (excluding goods bought by travelers); repairs to carriers in foreign ports goods); part of transportation (supporting and auxiliary services to carriers in foreign ports). Sectoral Statistics: Tourism Mode 3: Commercial presence Foreign Affiliates Trade in Services: FATS statistics BPM 5: Part of Construction Services FDI 13 Statistics: as a complement to FATS statistics Mode 4: Presence persons of BPM 5: Part of: Computer and information services; other natural business services; personal, cultural and recreational services; and construction services.

FATS (supplementary information): foreign employment in foreign affiliates. BPM 5: (supplementary information): labor related flows. Other sources: ILO International Standard Classification of Occupations (ISCO 88): International Classification of Status in Employment Barriers to trade in services are here categorized by the type of service and the mode of supply it is applied to. Member countries of WTO negotiate in the Doha round how to cut-off these barriers by the use of this scheme.

But still the GATS is just an instrument for the free international flow of services and it doesn’t take the impacts of the more liberalized service trade on its member countries into consideration, even for the sake of helping the economy of the developing countries. Foreign direct investment is the category of international investment that reflects the objective of a resident entity in one economy to obtain a lasting interest in an enterprise resident in another economy. 13 – 11 – IV. Barriers in Service Trade

The average level of protection on manufactured goods and services has declined since the Geneva GATT round in 1947. Later the GATS removed all tariffs set by the member countries of the WTO by service trade and so tariff barriers no longer restrict the free trade process. 14 Still the anti-globalization movement trys to point out some social problems which emerged because of the globalization process. It focuses on the dangers of liberalization of services such as social security, employment or access to domestic services.

Most barriers that face service trade are entry barriers to the foreign market, which don’t allow any investor to provide the service due to strict regulations or the high level of competition. The trade of services faces many more barriers than goods trade, which is due to the intangible and homogenous characteristic of services. 15 The level of service imports is that’s why difficult to record, as tariffs are not practical in protecting the domestic production of services. This lead to a high number of non-tariff barriers that either protect the domestic service market or stand in its way in trading services.

Non-Tariff Barriers in Service Trade These non-Tariff barriers can be set by the government, such as taxation, protectionism and other regulatory activities. They can be set due to international agreements such as import bans, boycotts and other political agreements that prohibit the exchange of services with certain countries. Furthermore, developing countries face other non-tariff barriers such as service quality, product standards, occupational safety and health regulations, inadequate infrastructure and intellectual property laws such as patents and copyrights

There are three main categories of non-tariff barriers that were lately identified, these are: Instruments of market access such as prohibiting foreign investment and restrictions made on the entry visa. Instruments that provide treatment to foreign service providers such as exclusion from investment incentives, the different treatment of non-citizens, taxes on cross-border supply through higher international telecommunication charges and taxes on tourism. 14 15 Koekkoek, A. ; 1989; “Developing Countries and the Uruguay Round”.

Whalley, John; 2004; “Assessing the Benefits to Developing Countries of Liberalization in Services Trade”. – 12 – – Other instruments that don’t aim affecting the market access but do so as long as they are practiced, such as consumer protection laws and cultural barriers. V. Impacts of globalization of services on developing countries The study “Service Trade Liberalization: Identifying opportunities and gains”, pointed out that developing countries proved to be especially successful in labor-intensive sectors (such as construction) and natural-endowment-intensive services, such as shipping and tourism.

This was explained by mentioning some companies in developing countries that reached a leading role in shipping services; e. g. Philippines, India, Thailand, South Korea and Brazil. 16 Developing countries were also able to develop their comparative advantage of the low-cost labor, by offering further education to its people. They now have highly-skilled workers who are specialized in certain professional business service tasks, such as engineering, architecture, economics and accounting, which lead to improving the quality of the services, yielding economies of scale and being more competitive. See figure: Trade restrictiveness index in the professional service sector) Consequently, new market niches such as banking, insurance and health services were created by developing countries, as they proved to be successful in developing financial services and handling micro-finance operations. (See figure: Trade restrictiveness index in the banking service sector) Other market niches such as internet banking, e-commerce and the development of secure payment, could easily find a place in the market of developing countries.

Concerning health services, developing countries were now offer health tourism, different kinds of treatment such as the alternative medicine and wellness. Trade liberalization didn’t only increase the amount of imports of developing countries in the several kinds of services, but it also increased the attractiveness of these countries to developed countries for foreign direct investment (FDI). 17 The number of offshoring, multinationals, franchising business and many other kinds of international corporations in developing countries has rapidly increased in the last two decades. The strongest investor is 16 17

Dihel, N. , Eschenbach, F. ; Shepherd, B. ; 2006; “South-South Services Trade”. Faini, R. ; 2004; “Trade Liberalization in a globalizing world”. – 13 – the USA and the strongest receiver was India, particularly in the IT business, software programming and the development of new information and telecommunication technologies. 18 (See Table: FDI outflows from some major developing countries, Figure: Growth of Indian software revenues, 1984- 2000) These new technologies made the creation of data networks possible, in order to instantly move information of important transactions across borders.

Multinational Enterprises now use their own data network systems, and so they can manage transactions in other branches all over the world with speed, accuracy, and sure by saving a lot of time and money. Impact on performance Liberalization of services improved the performance of the different service sectors for domestic and foreign providers. This did in terms: improve the quality of services due to new investments, the high level of competition and the changing environment; e. g. more efficient credit allocation by banks. create new types of services, such as the digitalization of telecommunications. see Figure: Trade restrictiveness Index in the telecommunications service sector) make formerly user-specific services available, such as business consulting for all types of firms. Impact on growth The service sector in India has been facing a continuing increase for about five decades. Agriculture is neither Indias’ main business sector nor industry, which means that the increasing GDP is mainly the result of the increasing service trade. (See table: Sectoral Growth Rates in India). Impact on foreign trade The cross border trade (mode 1) has increased in developing countries due to the increase of the import and export of services.

The trade share of low- and middle-income countries grew from 26% in 1994 (284 billion US dollars) to 28% (648 billion US dollars) in 2004, which represents a growth of 9 % p. a. , which is even higher than the share of developed countries which is about 7%. 18 Balatchandirane, G. ; Blasgen, M. ; Bode, A. ; House, C. H. ; Kenney, M. ; Mansingh, V. ; Marklund, G. ; Shah, B. ; Umezawa, T. ; “Chapter 3: The Country Perspective”. – 14 – Indias’ exports are continuously increasing, but imports are also increasing, which leads to a negative balance of payments; that’s why the Rupee is still a weak currency.

India’s exports faced an unprecedented growth after liberalizing trade in 1990, which can be seen in the table of foreign trade. This table pointed out that the trade in services increased by about 35% only during ten years, and then it continued increasing by a rate of about 20% per year since 2002. This means that about one quarter of India’s’ growth is because of its trade in the service sector, which means that trading in services is very beneficial for a country like India. (See table: Foreign Trade in USD) Impact on FDI The commercial presence (mode 3) through FDI in services has expanded.

In 2002, services accounted for about 25% of the total stock of the Indian FDI in developing countries and some 75% of the outward FDI stock of India in developed countries. VI. Concluding Remarks This papers’ aim was to discuss the impacts of services trade liberalization on developing countries and whether it’s favorable for them to get more involved in the service trade or not. I started by explaining the nature of services and their characteristics, in order to see to which extent is the trade in services a difficult process.

Developed countries started by producing services for their local market and not for the global market, and so they were able to focus on their high-quality production. On the other hand, developing countries didn? t start with services, they were busy by improving other sectors such as agriculture and industry, which were more important from their point view. Agriculture and industry are still the most important economic sectors especially for countries that are suffering from poverty and hunger such as India.

I can’t precisely say whether India’s decision towards more specialization in service production is good or not. It has been facing a large series of satisfying results: increase of exports, increase of GDP, decrease of the unemployment rate, increase of highly-skilled workers and increase in the overall level of satisfaction. Trade in services has sure solved many problems for India, but it made it more reliable on the international business market because of the high number of multinationals, offshore businesses and joint ventures in it.

India is now tied with international agreements such as the GATS; whereas such agreements don’t differentiate between developing and developed – 15 – countries. Developed countries are more active in services trade and they have the largest market share in it, and developing countries are just helping them to cut their costs and move up easier, which means that service trade liberalization is more beneficial to developed countries than to poorer countries. It also affects the individuals in developing countries in three main channels, changes in labor income, changes in relative prices and onsumption, and changes in household production. Whereas these three channels were affected in a negative way in case of India; labor income is rising but prices are also rising, people want to consume more because of the high number of services offered in the market. They are now more open to foreign markets, which emerged the need for services that weren’t given much importance in this society; e. g. 24 hours customer service. Talking about the society and the effects of liberalization on it, makes me come to mention an important problem that emerged because of the increasing trade in services.

Market openness has an indirect relationship with distributional changes which still can’t be measured accurately. The level of inequality of income distribution between residents of the same country is increasing by time. A country such as India has now many rich people, who are involved in trading the different kinds of services, whereas there are still people living in poor areas and don’t have sufficient income. Specialization is a keyword in this context; the more specialized a country can be in service production, the more it can be a market leader and improve its economy.

Developing countries should look for the kind of service in which they can have a competitive advantage and then concentrate on operating in this field. Another important aspect is the mobility issue of services, the more a country is able to adapt to the GATS modes of service supply, the higher its share in the world service trade; which will eventually yield many benefits to this country. – 16 – Appendix: Figure 1 : Openness in developing countries: 19 19 Faini, R. ; 2004; “Trade Liberalization in a globalizing world”. – 17 – Figure 2: WTO Members share in world commercial services trade:

Table 1: Types of entrants and their share in revenues and employment (1990-2000) 20 % of Sales Revenue 32. 8 4. 0 25. 6 2. 6 6. 4 8. 1 27. 9 1. 7 % in total employment 30. 1 4. 2 16. 8 6. 0 8. 1 10. 6 27. 2 4. 9 Types of entrant Business House firms Joint Ventures Multinational Enterprises Public Sector Enterprises US – Indian Entrepreneurial firms Professional Entrepreneurs Not known Revenue per employee (Rs. 10 Mill. ) 128. 68 111. 08 180. 25 50. 31 93. 53 89. 91 116. 18 41. 14 20 Athreye, Suma S. ; 2003; “Multinational Firms and the Evolution of the Indian Software Industry”. – 18 – Chart 1: Synthetic view of modes of supply: 21

Figure 3: Trade restrictiveness index in the professional service sector22 Data Source with some changes: Nguyen-Hong (2001) as reported in McGuire (2002) 21 22 2002. Manual on Statistics of international trade in services. Nielson, J. ; D. Taglioni; 2004; “Services Trade Liberalisation: Identifying Opportunities and Gains”. – 19 – Figure 4: Trade restrictiveness index in the banking service sector 23 Data Source with some changes: Adapted from Warren (2000a) by McGuire (2002). Table 2: FDI outflows from some major developing countries: 24 China 2002 Shares Values 21% 207 71% 700. 7 Shares India 2002/03 Values 25% 367. 75% 1104. 6 Developed Developing China: Approved FDI outflows Top 30 destinations India: Approved FDI outflows with geographical distribution Source: Calculations based on UNCTAD WIR, 2004. 23 24 Nielson, J. ; D. Taglioni; 2004; “Services Trade Liberalisation: Identifying Opportunities and Gains”. Dihel, N. , Eschenbach, F. ; Shepherd, B. ; 2006; “South-South Services Trade”. – 20 – Figure 5: Growth of Indian software revenues, 1984- 200025 Figure 6: Trade restrictiveness Index in the telecommunications service sector 26 25 26 Athreye, Suma S. ; 2003; “Multinational Firms and the Evolution of the Indian Software Industry”.

Nielson, J. ; D. Taglioni; 2004; “Services Trade Liberalisation: Identifying Opportunities and Gains”. – 21 – Table 3: Sectoral Growth Rates in India: Average Growth ( in percent per annum) Agriculture Industry Services 1951-1980 2. 1 5. 3 4. 5 1981-1990 4. 4 6. 8 6. 6 5. 8 1991-2000 3. 1 5. 8 7. 5 5. 8 3. 5 GDP Source: Own calculations using CSO data. 27 Table 4: Foreign Trade in USD Trade 1990-1991 2002-2003 2003-2004 18477 52719 63843 Total Exports 27915 61412 79149 Total Imports -9438 -8693 -14307 Trade Balance 28 Source – Reserve Bank of India Annual Report 2004-05 2004-2005 79247 107066 -27819 7 28 Gordon, J. and Gupta, P. ; Nov. 2003; “Understanding India’s Services Revolution”. Goyal, K. A. ; 2006; „Impact of Globalization on Developing Countries (With Special Reference to India) “. – 22 – References: 2002. Manual on Statistics of international trade in services. United Nations, Department of economic and social affairs statistics division, statistical papers; Series No. 86. 2009. Negotiating Trade in Services: A practical guide for developing countries; Washington DC. Aharoni, Y. ; 1993; “Coalitions and competition: the globalization of professional business services”; London: Routledge.

Aharoni, Y. ; 2000; “Globalization of services: some implications for theory and practice”, London: Routledge. Athreye, Suma S. ; 2003; “Multinational Firms and the Evolution of the Indian Software Industry”. East-West Center Working Papers. Balatchandirane, G. ; Blasgen, M. ; Bode, A. ; House, C. H. ; Kenney, M. ; Mansingh, V. ; Marklund, G. ; Shah, B. ; Umezawa, T. ; “Chapter 3: The Country Perspective”. Booz Allen Hamilton Inc. ; 2006; “The Globalization of White-Collar Work”. Daniels, P. W. ; 1993”; “Service Industries in the World Economy”. Dihel, N. Achenbach, F. ; Shepherd, B. ; 2006; “South-South Services Trade”; OECD Trade Policy Working Papers 39, OECD Publishing. Dossani, R. and Kenney, M. ; 2007; „The Next Wave of Globalization: Relocating Service Provision to India”; World Development; Elsevier; 35(5), 772-791. Dossani, R. ; Apr. 2005; “Globalization and the Offshoring of Services: The case of India”. Faini, R. ; 2004; “Trade Liberalization in a globalizing world”; University di Roma Tor Vergata. – 23 – Gordon, J. and Gupta, P. ; Nov. 2003; “Understanding India’s Services Revolution”. Goyal , K. A. 2006; „Impact of Globalization on Developing Countries (With Special Reference to India)“, International Research Journal of Finance and Economics; Issue 5. Grunfeld, Leo A. and Moxnes, A. ; 2003; “The Intangible Globalization Explaining the Patterns of International Trade in Services”. http://www. wto. org/english/res_e/statis_e/its2009_e/its09_toc_e. htm; The World Trade Organization; last visit 30. 12. 2009. Hufbauer, G. ; Warren, T. ; 1999; “The Globalization of Services: What has happened? What are the implications? ”. Koekkoek, A. ; 1989; “Developing Countries and The Uruguay Round”; University of Rotterdam.

Nielson, J. ; D. Taglioni; 2004; “Services Trade Liberalisation: Identifying Opportunities and Gains”, OECD Trade Policy Working Papers, No. 1, OECD Publishing. Primo Braga, C. A. ; March 1996 ; “The Impact of the Internationalization of Services on Developing Countries”; Finance & Development; Volume 33, No. 1. Schafmeister, A. J. ; “Offshoring and the global labour market”; Adecco Corporate Press Office. Whalley, John; 2004; “Assessing the Benefits to Developing Countries of Liberalization in Services Trade”; The World Economy, 27(8), 1223-1253. – 24 –

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Is the Globalization of Services Beneficial for Developing Countries?. (2016, Sep 30). Retrieved from https://graduateway.com/is-the-globalization-of-services-beneficial-for-developing-countries/

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